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It Doesn’t Matter If There Will “Always Be A Market” For Consoles

The Sigmoid Curve is a great representation for the flow of change, critical mass, and tipping points. Taken from Wikipedia.

A frequent argument that this next generation of consoles will not, in fact, be the last is that there will always be a market for consoles. That is, there will always be gamers willing to pay for consoles and console games, that this market will never go away, and, thus, consoles will keep coming out. Let’s assume for a minute that this is true. The fact that there are people who are willing to pay for a next generation Xbox or PlayStation does not guarantee that a new console will be developed. It doesn’t matter that a market exists. There is probably still a market for Betamax. It doesn’t meant Sony’s going to start building and distributing the things again.

A console essentially boils down to a movement, and movements equate to change. One of the hardest things to achieve in life is systemic change, and most attempts fail. A change initiative is typically represented as an s-curve like the one above. It’s hard to change social norms. It’s hard for fashion novelties to become trends. It’s hard for viruses to become epidemics. It’s a question of inertia and at the start of a movement it always works against you.

A console essentially boils down to a movement, and movements equate to change. One of the hardest things to achieve in life is systemic change, and most attempts fail.

Here’s the typical flow of how a new idea becomes a movement (along with X coordinates on the diagram above, for reference): the idea is first picked up by the mavens – those most interested/open/susceptible to it (-3 to -2). The mavens take the idea and “infect” their friends, the early adopters (-2 to -1). The early adopters serve as brokers between the mavens and the majority: you get enough early adopters onboard and the early majority (-1 to 0) will start to show-up. Once the early majority begins to gather in force, the idea achieves critical mass (0). This is the proverbial “tipping point”, when the force of inertia begins to work in your favor rather than against it: the early bandwagon pulls in the late bandwagon, and change has been achieved. But, this is far easier to explain than to accomplish. Building that critical mass requires massive amounts of effort, the right population of people, and, sometimes, a lot of luck.

Consoles, and new technology platforms in general, have a particularly nasty inertia: they have not one, but two such s-curves to overcome: install base and developer support. And these s-curves are not mutually exclusive. They are highly interdependent. In mathematical terms, one could almost consider them to modulate each other. In simple terms, if developers are not making software, consumers will not purchase the platform and secure an install base, and, if there isn’t an install base, developers will not want to expend the time and resources necessary to develop software.

There is a reason why the only new console lines to succeed in the last 20 years came from two of the biggest software and electronics giants in the world. Sony and Microsoft are two of the only companies* with the financial and logistical resources to buy their way into the necessary critical mass of install base and software. And the original Xbox, by some accounts, still would have failed if Microsoft had not purchased Bungie and Halo.

Sony and Microsoft are two of the only companies* with the financial and logistical resources to buy their way into the necessary critical mass of install base and software.

So, it doesn’t matter if there will always be a market for consoles. It doesn’t even matter if there are market mavens willing to take the plunge – it’s actually safe to assume there will be. What matters is whether there will be a market big enough, with enough developer support, to reach the critical mass necessary for the console to succeed and be profitable over several years of production. And if Sony, Microsoft, and Nintendo ever come to the conclusion that the answer is no, you can kiss consoles goodbye.

* Apple and Google being others, which explains a lot about the current state of mobile devices.